Thinking About Buying Property in the UAE?
If you are planning to buy a house or apartment in the UAE and do not have adequate resources to fund the cost, then this blog is for you.
Let’s break it down in plain English. This guide is for anyone thinking of buying property in the UAE – whether you’re a first-time buyer, an expat, or an investor looking for smart deals.
You might have heard of mortgage loans and interest on loans. Though the term sounds simple, many may not know what is it exactly, and why does it matter so much?
What Is a Mortgage Interest Rate?
A mortgage is a loan you take from the bank to buy a property. The bank doesn’t lend for free – they charge interest on the money lent.
The mortgage interest rate is that extra cost, shown as a percentage, charged by the lender of funds. For example, if you borrow AED 1 million and the interest rate is 3%, you’ll pay AED 30,000 extra each year, apart from the amount of the principal loan.
Why it matters:
- Low interest = lower monthly payments
High interest = higher monthly payments & more expensive property in the long run.
Fixed vs. Variable Rate Mortgage – The Difference
Fixed-Rate Mortgage
- The interest stays the same for a certain period of time, say 1–5 years.
- Easy to plan – no variation in instalment payable each month.
- Usually starts a bit higher.
- Good for expats or buyers who like stability.
Variable-Rate Mortgage
- The interest can go up or down based on the benchmarked rate.
- Starts lower than fixed loans.
- Your monthly payment amount could change.
- Better for experienced investors or flexible buyers.
Factors affecting the Interest Rate
Let’s look at what makes interest rates go up or down.
1. Your Financial Health
Banks look at your income, debts, and credit score. If you have a clean record and earn well, you’ll probably get a better deal.
2. Type of Loan
You’ll choose between a fixed or variable mortgage. The type you pick affects how much interest you pay.
3. Bank Rules
Each bank decides its own rates. Some might offer lower ones to attract customers, others might play it safe and charge more.
4. The Global Economy
UAE’s currency is linked to the US dollar. If the US raises or lowers its interest rates, UAE rates usually follow.
What Do UAE Mortgage Rates Look Like in 2025?
In 2025, mortgage interest rates in the UAE appear to be pretty steady. Here’s what you can expect:
- Fixed rates: 2.49% – 4.29%
- Variable rates: Starting from 2.25%
The final rate you get on the mortgage loan will depend on a few things: your credit score, the bank you choose, and what kind of mortgage you want.
How to Get the Best Mortgage Rate
1. Compare Banks
Don’t go with the first offer. Check out rates from banks like Emirates NBD, ADCB, and FAB.
2. Improve Your Credit
Clear your debts. Don’t apply for new loans before getting a mortgage.
3. Save a Bigger Down Payment
Expats usually need to pay 25% upfront. If you can pay more, banks might offer you a lower rate.
4. Try to Negotiate
Banks often have some wiggle room. If you’re a strong borrower, you can negotiate a better deal.
5. Get Help from a Broker
A mortgage broker, such as Galaxy Prime Mortgage Brokers LLC, knows which banks offer the best deals and can help you through the process.
Final Thoughts
Getting a fair mortgage deal in the UAE is not very cumbersome. A reasonable understanding of the interest rate mechanism and navigating around the available options can land you the best deal, whereby you can save a lot of money over the lifespan of the mortgage.
It’s all about being prepared, comparing offers, and asking the right questions.
Ready to Get Started? Still not sure what to do next? Talk to the experts at Galaxy Prime Mortgage. They’ll help you find the right loan, compare banks, and guide you every step of the way.